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CIRCULAR

Guiding the adjustment of work construction cost estimates

Pursuant to the Government Decree No. 36/2003/ND-CP of April 4, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government Decree No. 205/2004/ND-CP of December 14, 2004, providing for the system of salary grades, salary tables and salary allowance regimes applicable to state companies;

Pursuant to the Government Decree No. 118/2005/ND-CP of September 15, 2005, adjusting the common minimum salary level;

In order to adjust the work construction cost estimates according to new minimum salary regimes and competent state agencies' decisions on adjusted electricity and petrol and oil prices applicable to construction works under construction investment projects funded with state budget capital, State-guaranteed credit capital, the State's development investment credit capital, or state enterprises' development investment capital, the Ministry of Construction hereby guides the adjustment of work construction cost estimates applicable as from October 1, 2005, as follows:

I. ADJUSTMENT OF WORK CONSTRUCTION COST ESTIMATES:

Work construction cost estimates made according to current capital construction unit costs applicable to provinces or centrally run cities and calculated according to the salary grades of group I of salary table A6 issued together with the Government Decree No. 26/CP of May 23, 1993, with the minimum salary level set by the Government in each period shall be adjusted as follows:

1. Adjustment of labor costs:

Labor costs in work construction cost estimates, made according to above-said capital construction unit prices, shall be multiplied by the corresponding adjustment co-efficient (KDCNC) specified in Table 1 in the Appendix to this Circular.

For construction jobs of works of other groups of salary table A6, after being adjusted according to group-I co-efficients specified in the Government Decree No. 205/2004/ND-CP of December 14, 2004, the labor costs shall be further multiplied by the following adjustment co-efficient:

- For group II: 1.066

- For groups III and IV: 1.183

For construction works in which laborers enjoy subsidiary salaries, salary-based allowances and other regimes and policies not yet included in unit costs or enjoy itinerancy allowance at a rate of over 20%, such allowances may be added to labor costs according to current regulations.

2. Adjustment of construction machine costs:

Construction machine costs in construction cost estimates made according to capital construction unit prices shall be multiplied by the corresponding adjustment co-efficient (KDCMTC) specified in Table 1 in the Appendix to this Circular.

The adjustment co-efficients specified in the Appendix shall not apply to the adjustment of construction machine costs in work construction cost estimates, but such construction machine costs shall be determined according to the machine shift costs set by competent authorities separately from the machine shift cost table issued together with the Construction Minister's Decision No. 1260/1998/QD-BXD of November 18, 1998, Decision No. 10/2001/QD-BXD of June 11, 2001, and Decision No. 38/2002/QD-BXD of December 27, 2002.

3. Cost items calculated in percentage (%) in work construction cost estimates:

Other direct costs, general costs, pre-calculated taxable incomes, value added tax, and costs for construction of site makeshift houses for dwelling and construction administration shall be calculated in percentage (%) according to current regulations.

Contents of cost items in work construction cost estimates shall comply with current regulations.

II. ADJUSTMENT OF OTHER COSTS IN TOTAL COST ESTIMATES OF WORK CONSTRUCTION:

1. Adjustment of construction survey cost estimates:

For construction survey cost estimates made according to the construction survey unit costs set by presidents of provincial/municipal People's Committees on the basis of construction survey estimation norms enclosed with the Construction Minister's Decision No. 06/2000/QD-BXD of May 22, 2000, and the Construction Ministry's Circular No. 07/2000/TT-BXD of July 12, 2000, guiding the formulation of construction survey unit costs and the management of construction survey costs, such construction survey cost estimates with the minimum salary level set in each period by the Government shall be multiplied by the corresponding adjustment co-efficient (KDCKS) specified in Table 2 in the Appendix to this Circular.

2. Adjustment of labor costs in cost estimates of construction material and component experiments:

Labor costs in cost estimates of construction material and component experiments, determined according to the norms and unit costs of construction material and component experiments enclosed with the Construction Minister's Decision No. 32/2001/QD-BXD of December 20, 2001, shall be multiplied by the adjustment co-efficient KDCTN = 1.84.

3. Some other costs calculated in percentage (%) in total cost estimates of work construction shall be calculated according to the State's current regulations.

Particularly, pre-tax cost estimates for urban construction planning determined on the basis of construction planning cost norms enclosed with the Construction Minister's Decision No. 06/2005/QD-BXD of February 3, 2005, shall be multiplied by the adjustment co-efficient KDCQHXD = 1.09.

For cost estimates for provision of urban public-utility services, made under the Construction Ministry's Circular No. 05/2002/TT-BXD of December 30, 2002, guiding the formulation and management of costs of urban public-utility services, they shall be adjusted appropriately under the guidance of provincial-level People's Committees on the basis of specific conditions of each locality.

III. ORGANIZATION OF IMPLEMENTATION:

1. For construction investment projects which are being or have been formulated but not yet approved by agencies competent to decide on investment, their total investment capital shall be adjusted to suit the new minimum salary.

2. For construction works of construction investment projects for which designing dossiers-total cost estimates or cost estimates are being made, the estimated values of work construction costs and other cost items in the total cost estimates of such works shall be adjusted according to this Circular's guidance.

3. For works or work items, whose total cost estimates or cost estimates have been approved by competent authorities but for which bidding or contractor designation has not yet been or is being organized and the bidding results have been completed but contracts have not yet been signed, the investors shall adjust the total cost estimates or cost estimates according to current regulations.

4. For unfinished works or work items, the adjusted construction cost estimates provided for in this Circular shall apply to the construction volumes performed as from October 1, 2005.

Where the construction volumes are performed as from October 1, 2005, but the contractual parties agreed not to adjust prices throughout the performance process, investors and construction contractors shall negotiate to supplement the contracts in order to ensure the interests of laborers according to regulations.

5. For construction works subject to separate unit costs (unit costs for work construction), the works' boards for setting unit costs shall, based on the regimes and policies permitted by the State for application to such works and the principles of adjustment of work construction cost estimates as guided in this Circular, determine the levels of adjustment of labor cost, construction machine cost and other costs (if any) in work construction cost estimates.

6. For provinces or centrally run cities which have elaborated sets of construction unit costs according to the system of salary grades, salary tables and salary allowance regimes specified in the Government Decree No. 205/2004/ND-CP of December 14, 2004, the adjustment of work construction cost estimates shall be guided by provincial-level People's Committees.

The Construction Ministry requests provincial/municipal People's Committees to expeditiously formulate their construction unit prices on the basis of work construction estimation norms enclosed with the Construction Minister's Decisions No. 24/2005/QD-BXD of July 29, 2005; No. 28/2005/QD-BXD of August 10, 2005; and No. 33/2005/QD-BXD of October 4, 2005, and new regimes and policies on price and salary, in accordance with the guidance for formulation and management of construction unit prices in the Construction Ministry's Circular No. 04/2005/TT-BXD of April 1, 2005, and other guiding documents, for use as a basis for formulation and management of work construction costs as from January 1, 2006.

This Circular takes effect 15 days after its publication in "CONG BAO" and replaces the Construction Ministry's Circular No. 03/2005/TT-BXD of March 4, 2005, guiding the adjustment of cost estimates of capital construction works